Response to Hong Kong annuity scheme ‘within expectations’ but likely to fall short of US$1.27b target
Even though most senior citizens are not satisfied with the low returns, the scheme has drawn investments from retirees as old as 90
Hong Kong government’s HK$10 billion (US$1.27 billion) public annuity scheme may not quite hit its target when the subscription period closes on Wednesday as senior citizens find the returns to be too low, but the scheme’s operator says the “response is within expectations”.
The initial response, however, showed that there maybe no such need to lift the cap as many retirees contacted by the South China Morning Post considered the returns to be too low.
“After going through the details, it appears the returns are very low at just about 4 per cent, so I decided not to go for it,” said C T Hew, a 68-year-old public affairs consultant, echoing the concerns of many senior citizens the Post spoke to.
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“Many of my friends discussed the scheme and we decided not to invest because of the low returns. If the government were to increase the returns to a higher level, maybe my old friends and I would consider it,” he said.
He said investing in stocks may bring higher returns, but was also aware of the high risks involved.
Hew said another concern was the age factor. “Although the scheme guarantees a lifelong monthly payment from the government, you only profit from it if you live up to say 85 or so. We never know how long we will live, so I prefer not to bet on that.”
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Edmond Lau Ying-pan, chief executive of HKMC Annuity, which operates the scheme, however said the “response is within expectations”.
“The HK$10 billion is the cap for the scheme and not the sales target,” Lau said during a radio programme on Tuesday, ahead of the close of the subscription period.
“The cap is expected to be sufficient to meet the demands of the public,” adding that the scheme will launched at regular intervals annually.
He said those who have subscribed to the scheme are “relatively younger” retirees above 65 or early 70s, with a few above 80 and the oldest aged 90.
The subscription details will be disclosed at a later stage, he added.
The scheme is the latest effort by the government as it prepares for an ageing population. Hong Kong now has 1.3 million people aged 65 or above, about 18 per cent of its population, but that age bracket is expected to increase to 31 per cent of the population by 2036.
